China Galaxy Securities released a research report stating that in H1 2025, 15 listed pig farming companies collectively slaughtered 96.62 million pigs, up 32.4% year-on-year, with market share reaching 26.4% (up 6.3 percentage points year-on-year), hitting a historic high. Since 2025, the industry has entered the second wave of accelerated market share improvement. Excellent pig farming companies, despite pressure on pig prices, continue to maintain leading profits and widen the gap due to continuous cost optimization benefits. Since 2025, monthly pig prices of listed pig farming companies have continued to decline and are significantly lower than industry average levels. In terms of average weight, there has been a basic downward trend since June. Regarding Q4 2025 pig price trends, overall demand is in a continuous expansion range, but the supply side has shown accelerated improvement since August, and pig price trends may be quite volatile.
China Galaxy Securities' main viewpoints are as follows:
**Agriculture, Forestry, Animal Husbandry and Fishery Show Excess Returns, Breeding Industry Performance Leading**
From early 2025 to September 17, animal health and breeding industries performed best, with gains of 32.1% and 25.5% respectively, with pig breeding rising 28.5%. Most pig companies began turning losses into profits from Q2 2024, and since 2025, they have continued to maintain profitability due to continuous cost optimization benefits. For pig cycle allocation in 2025, the annual strategy report has emphasized the logic of both offense and defense since 2024, and with current policy advancement overlay, sustainable focus on the overall sector is warranted.
**Concentration Accelerates, Profits from Continuous Cost Optimization**
In H1 2025, 15 listed pig farming companies collectively slaughtered 96.62 million pigs, up 32.4% year-on-year, with market share reaching 26.4% (up 6.3 percentage points year-on-year), hitting a historic high. Since 2025, the industry has entered the second wave of accelerated market share improvement. Excellent pig farming companies, despite pressure on pig prices, continue to maintain leading profits and widen the gap due to continuous cost optimization benefits.
From the feed perspective, China's corn prices in H1 2025 still showed an overall downward average, but there was a stabilizing and improving trend between quarters, in a process of low-level volatile upward movement. Q2 listed pig companies maintained profitability, with year-on-year declines mainly due to significant pig price declines. Among them, only Muyuan Co., Xin Wufeng, and Huatong Co. showed both year-on-year and quarter-on-quarter increases.
**Pig Prices Continue to Hit Year Lows, Self-breeding and Self-raising Falls to Break-even**
In August, 15 listed pig farming companies' combined sales totaled 15.58 million pigs, up 7.2% month-on-month and 22.9% year-on-year. Among them, leading pig companies Muyuan and Wens' monthly slaughter volumes increased 10.2% and 2.6% month-on-month respectively. Among small and medium-sized pig companies, Lihua Co. showed significant increases both year-on-year and month-on-month.
From a pricing perspective, monthly pig prices of listed pig farming companies have continued to decline since 2025 and are significantly lower than industry average levels. In terms of average weight, there has been a basic downward trend since June. Regarding profits, August pig price pressure brought profit contraction/loss intensification across the entire pig breeding industry. Leading excellent pig companies have superior cost control and are estimated to still maintain profitability at current pig price levels. For other scale breeding enterprises with poor cost control, they may face break-even/loss situations.
**Based on Capacity & Efficiency Framework, Combined with Policy, Outlook on Pig Price Trends**
Pig slaughter volume is mainly determined by capacity and breeding efficiency. The estimated average effective breeding sows in 2025 is 40.42 million head, down 1.68 million head year-on-year, with significantly expanded decline and the highest point in nearly five years. Considering winter epidemic conditions in 2024 and pig companies' breeding conditions, MSY in 2025 has a significant upward trend. If MSY improves to above 18 head, annual pig prices may fall below 15.3 yuan/kg.
Regarding Q4 2025 pig price trends, overall demand is in a continuous expansion range, but the supply side has shown accelerated improvement since August, and pig price trends may be quite volatile. Regarding effective breeding sow conditions in 2026, continuous tracking of capacity changes within the year is still needed, while attention should be paid to this year's winter disease conditions to observe breeding efficiency changes in the new year.
**Investment Recommendations**
China Galaxy Securities believes that based on the capacity & efficiency research framework, pressure on effective breeding sows in 2025 has eased somewhat, but breeding efficiency may improve rapidly, making pig slaughter volume in 2025 likely to increase year-on-year, meaning pig prices in the same period will decline year-on-year. However, supported by low average feed raw material prices and improved breeding efficiency, excellent pig companies' cost optimization speed is accelerating, and profits of excellent pig companies in 2025 will still be considerable.
On this basis, combined with policy effects, the industry's capacity and slaughter may see new changes in 2026. Current industry competition has entered the stage of refined management competition. Combined with the relatively low valuation of the pig breeding industry, key recommendations include "large pig companies" Wens Foodstuff Group (300498.SZ) and Muyuan Co. (002714.SZ), "small and medium pig companies" Tecon Biology (002100.SZ), with attention to Shennong Group (605296.SH), DEKON AGR (02419) and other related pig companies in the sector.
**Risk Warning**
Risks include livestock and poultry prices not meeting expectations, animal epidemic risks, raw material price volatility risks, policy risks, natural disaster risks, etc.